A timely investing guide for younger investors facing a market pullback — and wondering whether to buy the dip or stay in cash.
Context: Year 2025 Tariffs, Trump, and Market Jitters
So the question many younger investors are asking: Should I buy the dip now? Or wait?
Why Buying the Dip Sounds Easy — But Isn’t
In theory, buying when others are fearful sounds like a smart strategy. But in reality, most investors:
Underestimate how long pullbacks can last
Get emotional when the market keeps falling
That’s why the best dip-buying strategies combine:
The Investing Wisdom of Waiting
Just because stocks are falling doesn’t mean you must act. Sometimes, cash is the best trade.
In the past few weeks, even as markets declined sharply, we at the InvestingLive Stocks Telegram channel had three dip-buying attempts — on AMD, Boeing, and Microsoft. All three trades were stopped out, each with an average 2% loss. But our overall participation was low by design. While many other investors stayed fully invested and absorbed the full extent of the market’s slide, we stayed nimble. By avoiding deeper exposure, we’ve clearly outperformed the broader market during this correction — simply by staying out when conditions didn’t favor our approach.
At InvestingLive, when we attempt to buy the dip, we don’t blindly average down. Instead, we cast a net of three layered orders within a predefined buy zone. If only one or two fill, we still participate in the potential rebound — with predefined stop-losses to protect our downside. That’s not persistence — that’s a system. Risk is capped. The zone is clear. And if the plan fails, we step aside.
The Art of Buying a Pullback — Without Losing Your Nerve
Step 1: Start Small, Scale Slowly
Use position sizing — buy a small amount, and only add if your thesis holds
Are you betting that the tariff fears are overdone?
Or that markets are just having a temporary panic?
If the story breaks, stop adding.
Accept that your first buy will likely show an unrealized loss
Patience Isn’t Laziness — It’s an Investing Skill
Most failed dip buys don’t fail because the idea was wrong. They fail because:
The position was too large
They panicked when the dip got deeper
? Tip: Markets often pull back for 2–3 months on the monthly chart — not just a few days or weeks. That means a 3–10% drop can turn into 15–20% before a bottom forms.
Buying early is okay — if you size for it. But trying to time the bottom and go all in? That’s asking for trouble.
If you want to buy the dip, try using a ladder approach:
Add another 25% if the market falls 5–8% more
This gives you:
More flexibility
Quote to Remember
Read Next for Your Investing Education:
Learn to Invest: Stay Humble — And Build an Edge Slowly
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This article was written by Itai Levitan at www.forexlive.com. Read More Details
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